Motley Fool: Slow growth and a fat dividend

General Mills (NYSE: GIS) – home to Cheerios, Nature Valley, Old El Paso, Pillsbury and Betty Crocker – has been in a slump, like many consumer staples companies. Part of the reason its shares have tumbled is that the ready-to-eat cereal market, where it’s a dominant player, isn’t a high-growth segment. Plus, consumer tastes are shifting; today’s on-the-go families aren’t as cereal-devoted as were their predecessors.

But this weakness could be a buying opportunity for long-term investors. The company has been cutting prices across some of its brands, which is juicing demand and resulting in improved sales volume and revenue. Investors are hoping that more such moves could contribute to a rebound.

Additionally, General Mills isn’t dependent on human consumers only. It’s the company behind Blue Buffalo pet food, and while that’s not a glamorous category either, that brand is a leader in “natural” dog food and among the top names in natural cat food. Those positions are relevant to investors because pet owners are often brand loyal; when they find a brand their pets like, they tend to stick with it.

Another reason General Mills could be a reliable long-term investment is its stable dividend income. At 5.5%, its recent yield is higher than that of 10-year U.S. Treasurys. Better still, the dividend has been increasing over time.

Ask The Fool

Q. What does it mean that some companies are “public” and others are “private?” – K.C., Draper, Utah

A. You can invest in a public company, usually by buying shares of its stock via a brokerage, but you probably can’t invest in a private one. Public companies are required to file quarterly and annual earnings reports with the Securities and Exchange Commission, which detail revenue, expenses, taxes, income or losses, debts, cash levels and much more; these reports are publicly available.

Privately held companies don’t have to reveal much about their operations and financial health. According to Forbes.com, the 25 biggest private companies in America include Cargill, Koch, Publix Super Markets, Mars, H-E-B Grocery, Fidelity Investments, Cox Enterprises, Bechtel, Meijer, Love’s Travel Stops & Country Stores, QuikTrip, Wawa, Edward Jones and McKinsey & Company.

Q. How can I tell whether a company pays a dividend? – H.S., Pierre, South Dakota

A. You might just call it, ask for its Investor Relations department, and inquire. Or check a financial website offering information on public companies, such as Finance.Yahoo.com. There you can look up the stock to see if it pays a dividend, and if so, how much it is now and its current dividend yield.

The dividend yield is more informative than the dividend amount, as it permits you to compare the payouts of different companies. The yield is the percentage of the current stock price being paid out annually in dividends. It’s calculated by dividing four quarters’ worth of dividend payments by the current stock price. So a company paying $0.75 per share quarterly ($3 per year) and trading at $150 per share would have a yield of 2% ($3 divided by $150).

My dumbest investment

My most regrettable investment? Well, I bought 700 shares of Generac in 2011 and 800 more in 2012. Later in 2012, after a nice run-up in the stock, I sold all my shares, netting a gain of over $17,000. I wish I had held on a while longer, though. – D.B., via email

The Fool Responds: You’re lucky if this is your most regrettable investment. While many people regret losing money on an investment, some others, like you, regret not having made more money.

Generac, which specializes in power generation and storage (and sells home generators), posted gains in eight of the 12 full years since 2012. Its performance has been lumpy, though, requiring a lot of risk tolerance. It posted triple-digit gains in 2019 and 2020, for instance, but also plunged by 36% in 2015 and 71% in 2022. Overall, it has averaged annual gains of 17.7% over the past 15 years, which well exceeds the (also very good) average annual gain over that time of around 14% for the S&P 500. (As the S&P 500 has averaged annual gains of close to 10% over very long periods, these recent years have provided better gains than usual.)

Your lesson is a reminder to consider hanging on to companies that are performing well – even after you’re sitting on solid gains.

(Do you have a smart or regrettable investment move to share with us? Email it to TMFShare@fool.com.)